BMG Chief Says Digital Cards to Begin Replacing CDs in 2 Years
Bloomberg News
May 7, 1999, 12:54 p.m. PT
BMG Chief Says Digital Cards to Begin Replacing CDs in 2 Years
New York, May 7 (Bloomberg) -- Compact discs will soon go
the way of the eight-track tape as small digital cards become the
next big thing for distributing music, said Strauss Zelnick,
chief of BMG Entertainment, one of the five big record companies.
In about two to three years, these ''flash memory'' devices,
smaller than a credit card, will be sold to consumers for use in
portable players, computers and other devices that play music,
Zelnick told the Bloomberg Forum.
The cards will be able to store as much music as a
conventional CD. The music could be prerecorded onto the card or
downloaded to it digitally by the owner, said Zelnick, chief
executive of the music division owned by Germany's Bertelsmann
AG, the world's third-largest media company.
''They will be a new format much the same way CDs were a new
format,'' said Zelnick, who doesn't foresee CDs disappearing
altogether for at least 15 or 20 years.
BMG, through its online alliance with Seagram Co.'s
Universal Music Group, may begin digital distribution of music
over the Internet ''in the next year or so,'' Zelnick said.
''I think, assuming there are (secure) standards in place,
it could be soon,'' he said.
The executive made his comments as the five major music
distributors -- BMG, Universal, Time Warner Inc.'s Warner Music
Group, Sony Corp.'s Sony Music Entertainment and EMI Group Plc --
are rushing to develop software to distribute music online that
will protect their copyrights and royalties. The industry has
been working to counter piracy on the Internet, where existing
technology, notably a software format known as MP3, lets people
download CD-quality music for free.
'Ideal Next Step'
''Flash cards are the ideal next step in music. Consumers
will be able to carry something around that's the size of a
postage stamp,'' Forrester Research Inc. analyst Mark Hardie
said. ''The audio CD has outlived its useful life.''
In the near term, there will be huge growth in the online
sales of compact discs, said Zelnick, who cited analysts'
estimates that the market will grow to several billion dollars in
the next couple years from about $200 million in 1998.
Still, traditional ''retail isn't going away. People like to
go out and shop,'' Zelnick said.
He also repeated that the Secure Digital Music Initiative, a
group of about 150 companies from the music and technology
industries, is likely to develop a secure standard by next month.
The group hopes the standard will be incorporated in portable
music players that hit the market by the year-end holiday season.
About 1 million portable music players will be sold this
year, Hardie estimated, adding that sales will increase to 32
million by 2003.
Separately, BMG declined to comment on reports that it is in
talks with AT&T Corp., Matsushita Electric Industrial Co. and
Seagram's Universal Music Group about forming an alliance to
develop a system to distribute music online.
More News: T
|
